Nikola Corp (NASDAQ:NKLA) stock plummeted after the heavy-duty electric vehicle manufacturer revealed it has filed for Chapter 11 bankruptcy.
The Phoenix, Arizona-based company said it has initiated an auction and sale process for its assets, with potential buyers including both strategic and financial investors.
Nikola reported assets valued between $500 million and $1 billion, while estimating its liabilities to be in the range of $1 billion to $10 billion.
The company plans to continue limited service and support operations for vehicles on the road, including certain HYLA fueling operations through the end of March 2025, subject to court approval. After that point, the company said it will need partners to support these activities.
Nikola is entering the Chapter 11 process with $47 million in cash on hand to fund these activities and implement the sale process.
CEO Steve Girsky said that, like other EV firms, the company has faced various market and macroeconomic challenges that have impacted its ability to operate.
“In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet and preserve cash to sustain our operations,” Girsky said.
“Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the board has determined that Chapter 11 represents the best possible path forward under the circumstances for the company and its stakeholders.”
Nikola went public in June 2020 and, at its peak, was valued at around $30 billion. The company has since faced numerous challenges including rapid cash depletion, difficulties in securing funding, multiple leadership changes, and the fallout from fraud allegations against its founder Trevor Milton.
Shares of Nikola had fallen 39.8% to $0.46 in the early afternoon on Wednesday.